INTRODUCTION
Making a purchase is a straightforward action, but the decision-making process behind it is complex. It involves evaluating the necessity of the item or service, considering its cost, and assessing its long-term value. One of the fundamental principles of smart spending is understanding the difference between needs and wants. A need is something essential for survival, such as food or shelter, while a want is something that enhances your quality of life but isn't necessary for survival.
One of the core skills in financial literacy is differentiating needs from wants. This sounds simple, but in practice it can be challenging, because human desire often blurs the line. A need is something essential for your survival or basic well-being. A want is something that you desire to have, but you could live or manage without it if you had to. Let’s put this in a Kenyan context with examples:
Needs: Food (especially nutritious staples – ugali, vegetables, etc., not necessarily snacks), housing (a safe place to live, whether rented or owned), basic clothing (enough to be decently covered for work and weather), healthcare (medications, doctor visits, NHIF contributions), basic education for children, transport to work (if you live far, you need to pay that matatu or fuel), and utilities like water and electricity. These are expenditures that should get first priority in your spending plan. Without them, your well-being or ability to earn income might be jeopardized. For instance, paying your electricity bill is a need if you rely on power for lighting your home or running a business; if you don’t pay, you get disconnected which could disrupt your life significantly.
Wants: Upgraded or luxury versions of needs, and non-essentials. Eating out at a restaurant vs. cooking at home is a want (you need food, but you don’t need restaurant food). Having a smartphone might be a need in modern life for communication, but getting the latest high-end iPhone when a basic Android would do is a want. Other wants include entertainment (Netflix/Showmax subscription, movies, concerts), fashion items beyond basic clothing (those designer shoes or an extra jersey because it’s trendy), vacations and travel, a car (for many, a car is a convenience want, not a strict need, unless your job specifically requires it or public transport is infeasible), and so on. For example, having internet at home is increasingly necessary for education/work (arguably a need in urban settings), but paying for the fastest fiber package when you only use it for Facebook might be a want-driven upgrade.
Why is distinguishing needs vs wants so important?
Because when money is tight (and for most people it is), you should ensure needs are covered first. It also helps in cutting costs when you need to – wants are usually the areas to trim. If faced with financial difficulty, you might cancel a vacation (want) but not stop buying food (need). It also helps prevent impulse spending on wants that can sabotage your budget. For instance, you walk into a mall to buy a new pair of work shoes (need), but you come out also carrying a new smartwatch (likely a want) that was on sale. Recognizing that the smartwatch wasn’t a need beforehand could help you resist that impulse.
A practical approach: when about to make a purchase, pause and ask yourself, “Do I need this, or do I just want it?” Be honest. If it’s a want, consider if you can truly afford it after meeting all your needs and savings goals. There’s nothing wrong with spending on wants – life would be pretty dull if we only ever bought the bare essentials – but it has to be within the limits of what your finances allow. One tip is to budget a fixed amount for “wants” each month (fun money). That way you enjoy guilt-free, knowing it’s accounted for. Once that allocation is spent, any other wants should probably wait.
It’s worth noting that needs and wants can be personal and may change with circumstances. For example, if you work online from home, a good internet connection might be a “need” for you, whereas for someone who doesn’t use internet for critical tasks, a home internet plan could be a “want”. School fees are a need if you have school-going children; if you don’t, that expense doesn’t exist for you. Thus, each individual/family should define their needs and wants clearly. Some Kenyan families actually write these down as part of their budgeting process.
A common scenario in Kenya is handling peer pressure or societal expectations, which can convert wants into “felt needs.” For instance, attending every social event or contributing large amounts to weddings can feel mandatory. Or there’s pressure to upgrade your phone or wardrobe to “keep up appearances.” Be cautious of this – remember, failing to impress others is better than going broke. If something is truly a want and you can’t afford it, it’s okay to say “sina pesa ya hiyo saai” (I don’t have money for that right now). Financially responsible friends will understand.
In summary, draw a clear line between what you must have and what is nice to have. Cover the must-haves first. Then, with whatever is left, you can enjoy some of the nice-to-haves, balancing today’s pleasures with tomorrow’s security. Mastering this balance is key to avoiding debt and financial stress while still enjoying life.
Conclusion
Spending is the flip side of the income coin – it’s where your hard-earned money goes. By developing smart spending habits, you ensure that your money works for you, not the other way around. In Kenya’s context, this means keeping a close eye on necessities like food, housing, and transport which take up bulk of expenses, and being savvy about discretionary spending. We’ve seen that budgeting is an invaluable tool: it gives you control and a clear roadmap of where each shilling will go. Embracing budgeting may feel restricting at first, but it’s actually liberating; it often reveals wasteful leaks in your finances and gives you the power to redirect funds to things that truly matter (be it your child’s education, building that house back home, or starting a small side business).
The Kenyan economy, with rising costs in some areas (inflation) and cultural expectations, can put pressure on individuals to overspend. But remember that financial discipline is a form of self-care – it reduces money-related stress and builds confidence in your future. A well-managed spending plan also sets the stage for effective saving and investing (coming up next). It’s like laying a strong foundation before building a house. When you spend with intention and clarity, you avoid the trap of living paycheck to paycheck and you’re less likely to fall into unnecessary debt.
Celebrate small wins in your spending journey: if you manage to stick to your budget this month, or if you successfully cut down on a habit (like expensive takeout coffees), acknowledge it! Those savings can go into your emergency fund or towards that plot of land you’ve been eyeing. Over time, mindful spending becomes second nature. And it isn’t about being miserly – it’s about being purposeful. As the saying goes, “Take care of the cents, and the shillings will take care of themselves.” By taking care of your everyday spending decisions, you set yourself up for big-picture financial health. Keep it up, and soon you’ll find you’re able to afford the things you truly value in life without guilt or panic.